Petition challenging audit and intimation liability orders under Section 65 CGST Act allowed after NCLT resolution plan approval

Karnataka HC allowed petition challenging audit and intimation liability orders under Section 65 of CGST Act, 2017 for financial years 2018-19 and 2019-20. Court held that since Resolution Plan was already approved by NCLT, the impugned orders and proceedings were without jurisdiction or authority of law. The orders were quashed as they lacked legal basis following NCLT's approval of the resolution plan.

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Issues:
1. Quashing of orders related to audit and intimation liability issued against the petitioner.
2. Extent of jurisdiction of authorities post-approval of Resolution Plan by NCLT.

Analysis:
The High Court of Karnataka heard a petition seeking to quash an order and notice related to audit and intimation liability issued against the petitioner. The petitioner had undergone Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code. The NCLT had approved a Resolution Plan submitted by NARCL. Despite this, the respondent authorities continued audit proceedings and issued orders for multiple financial years, including after the approval of the Resolution Plan. The petitioner argued that post-approval of the Resolution Plan, all prior claims and proceedings should stand extinguished. The court referred to the Supreme Court's judgment in a similar case and held that claims not part of the Resolution Plan should be extinguished. The court also cited a previous judgment where proceedings were kept in abeyance during a moratorium period. The court concluded that the orders and proceedings against the petitioner were without jurisdiction post-approval of the Resolution Plan.

The court noted that the claims against the petitioner for the financial years in question were invalid post-approval of the Resolution Plan by the NCLT. The court relied on legal precedents to establish that once a Resolution Plan is approved, claims not included in the plan should be extinguished. The court emphasized that the orders and proceedings against the petitioner lacked jurisdiction and authority of law after the approval of the Resolution Plan. Therefore, the court allowed the writ petition and quashed the impugned order, notice for intimation, and all related proceedings.

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